Traders lose some soyabean export contracts as rupee appreciates

28-Dec-2018

Traders lose some soyabean export contracts as rupee appreciates

Soyabean export contracts over 1 lakh tonne have been cancelled from India on account of the appreciation of the rupee, top industry officials said. The impact, however, has been offset to some extent by exports to Iran between April to November 2018.

According to Davish Jain, president, Soybean Processors Association of India (SOPA), the appreciation of the rupee caused a sudden flux in the pricing of soyabean in the international market which led to the cancellation of contracts.

The rupee, which was trading at 74 per dollar a few months ago, has risen to 70, making it difficult for Indian traders to match up to overseas markets, he pointed out.

The current exchange rate and higher prices are unfavourable for overseas countries to import from India, he said, adding that Indian soyameal is costlier by $100 a tonne. When the rupee was weak, gains were 4-5 % for the traders, but with strengthening of the rupee, Indian exporters have lost the advantage, he said.

Moreover, the expectation that China would import soyabean from India against the backdrop of trade tensions with the US, has not really worked because of the lengthy procedures involved. “We understand from ministry of commerce/Export Inspection Council of India that China will resume import of rapeseed meal from India. Those five units already approved by General Administration of Customs of the People’s Republic of China, GACC (formerly AQSIQ) will be able to resume the export of rapeseed meal to China once their registration with Chinese ministry of agriculture (MoA) is done.

It is a cumbersome process and takes a long time. In case of resumption of export of soyabean meal from India to China, it may take some more time as Chinese GACC team is likely to visit during current month to inspect/approve the units.

Prior to the ban in 2012, China used to import nearly half a million tonne of oilmeals (rapeseed meal 3.5 to 4.0 lakh tonne and 1.0 lakh tonne of soybean meal) from India,” BV Mehta, executive director, SEA, had said. Although the team has visited these units last week, the procedure is expected to be slow, officials pointed out.

Senior officials pointed out that the Chinese government has asked the Indian government for a draft of protocol for Indian soyabean meal. According to the Solvent Extractors Association, the Iranian market has opened up for Indian soyabean meal. During current year, from April to November 2018, about 2 lakh tonne of soyabean meal was shipped as against last year’s figure of 23,000 tonne. During April-November 2018, Vietnam imported 355,688 tonne of oilmeals (compared to 321,803 tonne) consisting of 20,573 tonne of soyabean meal, 123,183 tonne of rapeseed meal and 211,719 tonne of rice bran extraction.

According to SEA, prior to the ban in 2012, China used to import nearly half a million tonne of oilmeals — rapeseed meal 3.5-4 lakh tonne, and 1 lakh tonne of soybean meal — from India.

In the domestic market, soyabean prices have mostly stayed below the minimum support price (MSP) since harvest began from mid-October, and have started moving upwards only after Diwali. Including bonus of Rs 200 per quintal, the government has increased the MSP of soyabean by 11.5% to Rs 3,399 per quintal in 2018-19 from Rs 3,050 per quintal in 2017-18.

Davish Jain pointed out that at present the soyabean arrivals in Maharashtra are weak but had picked up in Madhya Pradesh. Average soyabean prices are currently ruling at Rs 3,400/quintal. As per the SOPA projections for 2018-19, soyabean supply in the country will hover around 118 lakh tonne, including 115 lakh tonne of production, 15 lakh tonne of carryover stock, and about two lakh tonne of imports. SOPA estimates export of soyabean at about 3 lakh tonne and soyabean meals at about 25 lakh tonne.